Why Asia is the Champion of Globalization

Opening remarks by Dr. Ronald Meinardus at the symposium on: Retreating US, Rising China: How Should We Respond?, Kuala Lumpur, September 12, 2017

Initially, I wanted to start with sharing anecdotal evidence of China’s growing influence in South Asia. In hotels like this one here, the visitor is surrounded by Chinese businessmen and women – be it in Lahore or Karachi or, as I just witnessed, in Colombo. You also meet numerous Chinese delegates in Bangladesh, Nepal or the Maldives: I get the feeling, they are everywhere.

As I arrived in Malaysia, my anecdotal South Asian impressions were given empirical backing as I picked up the Sunday Star newspaper with a full page interview with Chinese Ambassador Dr. Huang Huikang titled “China investments transforming Malaysia”. This is a fascinating first-hand account of how China is taking control of the Malaysian economy - and selling this systematic and strategic effort to the public as a “win-win” solution for both sides.

“Every Chinese project brings employment and economic growth.” The ambassador’s rhetoric is indicative of a growing Chinese assertiveness visible in many parts of the world. I personally have witnessed this in South Asia, Northern Africa and last not least in Greece – all with noteworthy political implications.

The world we live in has turned upside down: in a remarkable reversal, we are witnessing a backlash against globalization in Western countries and a return to isolationist practices by no less than the leader of the so called free world. At the same time, the communist superpower is distinguishing itself as a champion of free trade and globalization.

This rupture is, if we look at it as a megatrend of history, reflected in a shift of gravity of the economic center of the world. In the past decade, this center has moved to East Asia, foremost China, leaving Europe and North America behind.

In line with this reversal, the attitudes regarding the benefits of globalization are far more positive in Asia than in the West: According to a survey of 2016, only 37% Frenchmen and 40% US Americans said, globalization has a positive effect on their society. The numbers for Vietnam and India are 83% and 91% respectively (YouGov Survey, November 2016). In line with this positive perspective regarding globalization, Asians are particularly optimistic about their financial and economic prospects. According to a Pew Research Center Report (of October 2014), “fully 94% of Vietnamese, 85% of Chinese, 71% of Bangladeshis and 67% of Indians think today’s children will be better off than their parents”. On the other side, the report writes, “in Europe and the United States, pessimism is pervasive”.

This pessimism is fodder and the raw material on which the nationalists and populists build their illiberal campaigns.

What is the background of these important perceptional differences of opinion in the highly developed and emerging economies? The one are saturated, well fed - and in the process of moving into a post-material world. The others are late comers, hungry to grow, ambitious and aspirational.

Of course, all this has major political implications. From a liberal perspective, it is worth noting that people in the emerging economies are typically more supportive for the free market system than those living in advanced economies. Support for capitalism – again these are Pew Research Center data - is highest in Vietnam (97%), China (76%), Malaysia (73%) and India (72%). Germany is not bad with 70% and France scores a 60% result.

One interpretation of this data could be that countries in the catch-up race are more inclined to market solutions; as soon as they reach a level of maturity they become status quo powers with the intention to defend what they have blocking off serious contenders. I would argue we could see the same pattern once the Chinese have reached dominance in the markets they are now taking over.

Dominance and monopolies are never good, neither in politics nor in the economy. Therefore, a regulatory framework is needed that sets out the rules for economic cooperation.

The most advanced model of supra-national economic (and political) cooperation and integration is seen in the European Union. “Are Germany and the European Union expected to replace the US?” is one of the questions the organizers of this symposium want us to answer. One year ago, pessimism and self-doubt overshadowed Europe also. Brexit and the fear of a Le Pen victory threatened the grand plans for European integration. While Brexit is reality, the voters have since, on more than one occasion, shown support for the European project. Macron’s triumph in France and the expected outcome of the German general elections confirm that the people of Europe in their majority are against reactionary and nationalist models. A recent opinion poll of the European Commission (August 2017) supports this assessment: Titled “A European Spring?”, the pollsters reveal that 56% of Europeans are optimistic about the future of the EU.

This report also lists the main challenges of the EU today: Terrorism, immigration, the economic situation. These are problems that Europe cannot tackle on the basis of the nation state.

The question, whether Europe and Germany can replace the US is theoretical. It suggests this is a desire. However, the EU is different from traditional super powers; it does not aspire (political) supremacy. For its defense, the EU is heavily dependent on the US. In light of isolationist signals from Washington, German Chancellor Angela Merkel suggested it is high time “to take our fate into our own hands”.

It is hard to imagine that the EU competes for power with the US and China in this part of the world. Collectively, the Europeans seem content to be economic partners only. For their restraint, the Europeans have earned respect and acknowledgment.

While the EU may not be the world leader in terms of military force and Realpolitik, it is a highly popular power in Asia and most other parts of the world: According to the recent Eurobarometer, 84% of Chinese, 83% of Indians and 76% of Japanese have a positive view of the European Union. The survey shows that “the EU is globally perceived as a place of stability in a troubled world”. Among the assets of the EU are respect for democracy, human rights and the rule of law. With the US government giving up on these liberal principles in their foreign affairs, the role of Europe as protector and promoter of liberal principles has grown tremendously.